The new year will likely be challenging for steel players in the energy sector, market sources tell Kallanish, sister publication of Kallanish Energy.
Oil country tubular goods prices will be largely dependent on skelp absent some rise in demand, buy-side sources say. That’s a continuation of the pattern that’s essentially mired prices for representative product P110 domestic welded casing at $1,050-1,100/short ton.
The factors weighing on down-hole tubulars should also carry over to line pipe, says a Gulf Coast trader. “Midstream build-outs are basically finished, so there’s low line pipe demand,” he told Kallanish. “Production should pull back, so existing lines will have capacity, and uncertainty is still freezing capital.”
Ultimately, the problem is not exotic, he says – it comes down to supply and demand. “The service sector is trying hard to move pricing north, and what little activity there is for next year will be more costly to drill and complete,” he said. “Mills are trying to move hot-rolled coil and whatever they can get to stick will be baked into pipe pricing going forward. There’s still just too much capacity and too little demand.”
This post appeared first on Kallanish Energy News.